The Most Profitable Restaurant in America

With nearly $60 million a year in revenue, Tao Las Vegas at the
Venetian Resort Hotel Casino isn't just the highest-grossing restaurant
in America. It's also the most profitable. The difference between money
made and money kept is key when you consider that Tavern on the Green,
the second-highest earning restaurant in the country, went bankrupt
despite pulling in $27 million in 2009.

What's Tao's secret, besides the out-sized portions? It's three-fold, writes author Joel Stein. First, it's in Las Vegas, where people flat out come to spend.
Second, it's wicked boozy. Most restaurants hope to make 30 percent of
their revenue from alcohol, whereas Tao Las Vegas takes in 75 percent
in price-gouged cocktails. Third, it's mastered the elusive art of
appealing to both partiers and grannies. During the week, Tao markets
aggressively to conventioneers, families, and theater-goers looking for
a manageably ostentatious evening. Come late-night and weekends, it's a
magnet for celebrities, celebrity-gawkers, and young people too drunk
to know whom they're gawking at in the first place.

While most restaurants aim to make about 30 percent of their revenue
from alcohol, Tao Las Vegas takes in about 75 percent. "When we buy
vodka, we buy it by the pallet," says Rich Wolf, one of four partners
in Tao Group, which owns 12 restaurants and seven clubs in Vegas and
New York. "We have a different model. We're throwing a party with a
restaurant," he says. Thirteen-dollar Tao-tinis and Tao-hitos might be
profitable, but it's hard to sell alcohol over the long haul. "You get
a bottle for $10 and sell it for $400," says partner Paul Goldstein.
"But how do I get 400 people in a nightclub every single night?"

The answer, it turns out, is more complicated than merely hiring
scantily clad women to bathe in a tub with roses--or calling Kim
Kardashian's agent. When Tao Las Vegas opened at the Venetian, a hotel
built largely to accommodate the huge convention center attached to it,
many predicted failure. Remembers Wolf: "They said, 'There's no vibe at
the Venetian. It's all conventioneers. It's dead after 10 p.m.' " So
the restaurant adjusted by marketing to the conventioneers during the
week before letting in the club kids. As a result, both contingents can
say they partied at Tao Las Vegas without knowing the other did. The
models don't have to see the Midwestern salespeople, and the Midwestern
salespeople don't have to fret about being rejected by models.